Goldman Sachs and Morgan Stanley to Become Bank Holding Companies

The economic news continues to worsen, and the robber barons are finding it harder to lurk in the shadows.

The newest bailout plan would give Treasury Secretary Henry Paulson unchecked, unprecedented power. He would have $700 billion (more than defense, education, and DHHS combined) to buy bad assets from struggling companies, even foreign companies, should he deem necessary. The plan would prohibit any judicial review of the program or the purchases, so if any illegal activity occurs there would be no recourse. Why ask for preemptive immunity unless they plan on breaking the law?

This evening we learned that investment banks Goldman Sachs and Morgan Stanley will become bank holding companies, as the Federal Reserve announced the approval of their applications.

From wikipedia (emphasis added):

A bank holding company, under the laws of the United States, is any entity that directly or indirectly owns, controls or has the power to vote 25% or more of a class of securities of a U.S. bank… Actions of bank holding companies are covered under the Bank Holding Company Act of 1956 (12 U.S.C. § 1841(a)(2)(A) et seq.)…

Becoming a bank holding company makes it easier for the firm to raise capital than if it remained a traditional bank. It can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater ease. It also has a greater legal authority to repurchase its own stock once issued.

No, the stockholders were not notified of the applications so they could take appropriate action.

Following is a list of the US financial institutions which have failed or been taken over this year. This may not even be complete, as we can see how informed they like to keep us lowly taxpayers. It is time to prepare, folks. Every single American, and most people in the world, are going to be affected by this in one way or another. You need to immediately take the necessary steps to hedge your bets and protect yourself from the continuing and worsening financial turmoil. But keep in mind, this is also good news. The robber barons are being exposed. We simply need to let the chips fall and ensure we don’t allow any bailout proposals drawn up by the same money changers who created this crisis. Paulson is a former money changer himself. Don’t trust the devil to save you from hell.

01-11-2008 – Bank of America rescues Countrywide in takeover

01-25-2008 – FDIC takes over Douglass National Bank

03-07-2008 – FDIC takes over Hume Bank

03-16-2008 – NY Fed bails out Bear Stearns

05-09-2008 – FDIC takes over ANB Financial

05-30-2008 – FDIC takes over First Integrity

07-11-2008 – FDIC takes over Indymac

07-25-2008 – FDIC takes over First National Bank of Nevada and First Heritage Bank

08-01-2008 – FDIC takes over First Priority Bank

08-22-2008 – FDIC takes over Columbian Bank and Trust Company

08-29-2008 – FDIC takes over Integrity Bank

09-05-2008 – FDIC takes over Silver State Bank

09-07-2008 – Federal Housing Finance Agency takes over Fannie Mae and Freddie Mac

09-14-2008 – Bank of America buyout of Merrill Lynch and Lehman Brothers files bankruptcy

09-17-2008 – NY Fed bails out AIG

09-19-2008 – FDIC takes over Ameribank, Inc.

Did I miss any?

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~ by skepsis on September 21, 2008.

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